Elon Musk’s company suffered an impairment loss of $101 million in 2021 linked to bitcoin, but it continues to believe in the future of crypto.
The recent tremors in the crypto market haven’t changed Tesla’s confidence in bitcoin. On the contrary.
The electric vehicle manufacturer still has the king of cryptocurrencies on its balance sheet. This share is valued at $1.99 billion as of Dec. 31, CEO Elon Musk’s group said on Monday.
Tesla had invested $1.5 billion in bitcoin in early February 2021. This large investment considered one of the biggest brand endorsers of bitcoin had contributed to the surge in the crypto market overall. Many investors believe that if Tesla, symbol of the future of the car, made such a colossal gamble, investing in digital currencies would be worth it.
While the Austin-based group says it made an $128 million gain selling some of its bitcoins in the first quarter of 2021, it ended the year with a $101 million asset impairment loss related to bitcoin.
“As of December 31, 2021, the carrying value of our digital assets held was $1.26 billion, which reflects cumulative impairments of $101 million. The fair market value of such digital assets held as of December 31, 2021 was $1.99 billion,” the company said.
Tesla Could Buy More Crypto
Despite this loss, Tesla remains confident in bitcoin and cryptocurrencies in general. The group does not, for example, rule out the possibility of still buying digital currencies.
“We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash”, the company said in its annual filing with the U.S Securities of Exchanges Commission (SEC). “As with any investment and consistent with how we manage fiat-based cash and cash-equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on the needs of the business and our view of market and environmental conditions.”
After a black month of January, cryptocurrency prices rebounded at the end of last week. They are now on an upward slope, led by bitcoin which was up 5.3% at $43,841.49 at the time of this writing. Even meme coin dogecoin, Tesla CEO’s favorite digital currency, was up 11.1%.
Musk is one of the great champions and gurus of cryptocurrencies. His pro-dogecoin tweets have often sent dogecoin prices soaring. He even recently offered McDonald’s the chance to eat one of their burgers on Television if the fast-food giant would accept dogecoin as payment.
Tesla for its part had briefly accepted bitcoin as a means of buying its cars before doing an about-face last May for environmental reasons. But the electric vehicle maker recently accepted dogecoin for Tesla merchandise.
The process of validating bitcoin transactions, known as proof-of -work, requires high energy consumption. Musk, however, has previously said that Tesla will resume accepting bitcoin once progress has been made on this.
